College Station City Council Joins Bryan in Regulation of Payday Loans

February 28, 2014
The Eagle (TX) 
payday lending news
In Texas, the College Station City Council has adopted regulations that restrict payday lenders. The state currently has no limits on fees or loan sizes from payday or auto title lenders, but jurisdictions across Texas have been pushing for more consumer protections. Major cities such as Austin, Houston, Dallas, and San Antonio have adopted ordinances to tighten control of loans. Most recently, Bryan passed the second reading of restrictions at its Feb. 4 meeting.

In College Station, payday lenders will have to be licensed and certified with the city. The new ordinance also caps credit at 20 percent of a consumer’s gross monthly income. Auto title loans cannot exceed 3 percent of the consumer’s gross annual income, or 70 percent of the retail value of the vehicle. Repayment for lump-sum loans will not be able to be refinanced or renewed more than three times. Proceeds from each refinancing or renewal must repay at least 25 percent of the extension's principal amount, and each installment for repayment must cover at least 25 percent of the principal. The ordinance is set to take effect in August.

Payday and auto title lenders in College Station issued more than 31,000 loans in 2012, leading to $2.4 million in fees and 269 vehicle repossessions, reports David Brower, community development analyst with College Station. He says there are five payday lending businesses in College Station. The Center for Responsible Lending notes that interest on car title loans often is 20 to 30 times that charged by credit cards.

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